Banking on Linux pays off for National Australia Bank

The shift to open source has led to more agile IT infrastructure

A shift to Linux-based grid computing at the National Australia Bank (NAB) has opened the gate to a more agile IT infrastructure and dramatically reduced maintenance costs, according to one of the bank’s senior technology strategists.

Speaking at a Red Hat Linux event in Sydney recently, the NAB’s architecture strategy manager for enterprise technology, Simon Spencer, said the bank needs to be more innovative with its infrastructure because it is becoming more important to be able to deliver cost-effective, agile and integrated financial services solutions.

To explore infrastructure options, NAB established a Linux innovation lab, dubbed “G2,” and ported a number of its core applications to Oracle’s 10g on Red Hat Linux.

The G2 name came from the two databases it contained — inbound transactions from ATMs to an operational database, like a piece of middleware, and the replacement of the bank’s global warehouse.

After a successful trial phase, the bank went live with a global data warehouse that has been in production for the past year.

“The NAB now runs one of the largest data warehouses at around 11TB with 30GB of raw transactions a day [processed] on a Linux-based infrastructure,” Spencer says.

He says the data warehouse is used for every major part of the bank but critically for financial reporting, global risk management and regulatory reporting, including Basel II compliance.

Spencer attributes the change to a willingness to innovate at the bank.

“[NAB] has a culture of open innovation,” he says. “Could we use Linux inside NAB? We grabbed a consortium of partners in a room who coughed up hardware and support to find out.”

The original project, called “Pinta” after the fastest of explorer Christopher Columbus’ three ships, showed the bank it could move to Linux, but it also showed what was missing, such as storage drivers from EMC.

With the global data warehouse and “Super Mart” database in place, the bank has also experienced significant cost savings by moving to Linux on Intel and away from Solaris on Sparc.

The previous system was a Sun Microsystems E10,000, which was costing upwards of A$800,000 (NZ$950,000) in maintenance fees for the hardware alone.

“Comparing the transaction throughput wasn’t a fair comparison as the E10,000 was older, but what was important was we could do the port, it was stable, and not expensive,” Spencer says.

With the data warehousing projects now merged, the NAB has ten four-way Itanium-based servers in a shared grid.

Spencer says moving from a “big SMP” system to low-cost hardware was a big change, but it has resulted in faster processing and more flexible procurement.

“Capacity planning for a new project is inherently risky, [but] we can buy additional capacity in lots of A$40,000, which is easy to ‘smooth out’ to the business,” he says.

While conceding banks have typically been conservative and risk-averse, Spencer says there is greater risk in doing nothing.

With Linux having proven itself at the bank, the next step on NAB’s open-source journey involves people “picking up operating system tools at all levels, and a limited amount on the desktop.”

As for open-source databases, Spencer says the bank is open to discussion but does not see a compelling reason to get such databases now.

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Tags managementLinuxNational Australia Bank

More about EMC CorporationIntelLinuxNABNational Australia BankOracleRed HatSun Microsystems

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